Facebook hit with class-action suits following stock tumble

FACEBOOK HAS BLED one million active monthly users since the General Data Protection Regulation (GDPR) came into effect. But the number of American users who use Facebook every month has flatlined, the company reported, raising questions about how much longer the social network can continue to expand in the USA market. Total expenses in the second quarter surged to US$7.4 billion, up 50 per cent compared with a year ago.

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Speaking of market-leading tech stocks, Facebook’s mega-cap counterparts Apple, Amazon, Netflix, and Alphabet all lost more than 1.5% at their overnight lows, and the Nasdaq 100 index dropped 1.4% in regular trading hours.

Facebook’s shares recovered somewhat after the call.

The sudden drop in Facebook stock was a result of the announcement of second-quarter earnings which did not meet the companies predicted numbers. The company said revenue from the category and some other items grew 132 percent to $2.2 billion (roughly Rs. 15,000 crores).

The plunge came after Facebook executives said the company expected a significant slowdown in its revenue growth in the years ahead.

At the same time, the company also reported that growth was flat in North America.

In lieu of Facebook’s current multi-front crisis, one activist investor filed a proposal demanding that Zuckerberg be replaced as the firm’s chairman for “mishandling” the numerous crises beleaguering the company, according to a report by Fortune.

“With stagnating core user growth, we think there is too much near- to mid-term uncertainty to recommend shares at this point”, Japanese investment bank Nomura said.

No company has ever dropped that much in history. Indeed, the drop Thursday morning was sharper than the multi-day stock slide in March following revelations of data misappropriation by Cambridge and others. The social media company has contended for years with criticism about its content policies, its failure to safeguard private data and its changing rules for advertisers.

The company said for the first time that more than 2.5 billion users interact with at least one of its apps each month, but analysts have said many of them are spending more time with Messenger, WhatsApp and Instagram.

Now we have real-life advertising from Facebook saying it’s concerned, and looking after our privacy.

Facebook’s stumble suggests that some of these stocks – as well as the broader market – could be particularly vulnerable if their financial results don’t live up to investor expectations.

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“This is a privacy wake-up call that the markets are delivering to Mark Zuckerberg”, said Jeffrey Chester of the Center for Digital Democracy, a privacy advocate, according to The Washington Post.